The Reserve Bank of India’s (RBI) order on Paytm Payments Bank has raised a few questions among its customers. Allaying all the apprehensions, Paytm’s parent company One97 Communications, stated that the RBI order does not impact any existing customers of Paytm Payments Bank (PPBL).

The RBI last week directed Vijay Shekhar Sharma- promoted Paytm Payments Bank to stop opening new accounts amid “material supervisory concerns” observed in the bank.

RBI ORDER TO PAYTM PAYMENTS BANK

“Reserve Bank of India has today, in exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers,” the central bank said in a statement.

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.

“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing reports of the IT auditors. This action is based on certain material supervisory concerns observed in the bank,” it said.

FREQUENT PROHIBITIONS

• This is the third time that Paytm Payments Bank is facing action from the banking regulator since its inception in May 2017. It has been prohibited from opening new accounts for the second time, according to a PTI report.
• Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida. As per the last disclosed numbers, PPBL had around 6.4 crore customers.
• The RBI had in June 2018 too prohibited PPBL from onboarding new customers on account of supervisory concerns. The restrictions were lifted on December 31, 2018.
• The central bank had also issued a show cause notice to the firm dated July 29, 2021, stating that Paytm Payments Bank had committed an offence under the Payment and Settlement Systems Act, 2007 by submitting false information to RBI confirming completion of the transfer of Bharat Bill Payment Operating Unit business by One97 Communications to PPBL.
• The RBI had imposed a penalty of Rs 1 crore on Paytm Payments Bank for the offence.
• Sharma holds 51 per cent stake in Paytm Payments Bank (PPBL), while the remaining 49 per cent is held by One97 Communications.
• China-based Alibaba group is the biggest shareholder in One97 Communications with about 31 per cent stake through its subsidiaries.

TOP POINTS FOR CUSTOMERS

• The Company would like to reiterate that this does not impact any existing customers of PPBL, who can continue to use all banking and payment services without interruption, One97 Communications stated in a BSE filing.
• All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these instruments, including debit cards and net banking, for payments, according to One97 Communications.
• New users can also sign up on the Paytm app, and transact by creating UPI handles and linking them to their bank accounts, or by using third party payment instruments, for transactions on the Paytm app, the company said.
• However, users can not, until further notice, sign up for new PPBL wallets or PPBL savings or current accounts.

NO DATA LEAK

Paytm Payments Bank on Monday said it is fully compliant with the data localisation rules of the Reserve Bank of India and the entire data of the bank resides in the country.

Investors in India’s Paytm do not have access to customer data of its payments bank, CEO Vijay Shekhar Sharma told Reuters while seeking to allay concerns over reports of user data being leaked to Chinese firms.